The Necessity of LTCI

Long-term care prices continue to rise, while most Americans face retirement without coverage.

By Maggie Leyes, Sept. 2005

Ask your Baby Boomer client if he is willing to make a $134,000 dip into his portfolio this year. If he lives in New York and needs long-term care in a nursing home, that’s what a year in a private room could set him back. The numbers are staggering. And according to Genworth Financial’s 2005 cost-of-care benchmark survey, the cost for long-term care—from nursing homes to assisted living to home care—is going nowhere but up, across the nation.

The survey, which compiled data from more than 7,000 providers in close to 90 areas across the country, compared current long-term-care costs with last year’s figures. The average cost of a private room in a nursing facility has shot up 6 percent over last year, to just shy of $70,000, with urban areas in states such as New York and California outpricing their rural counterparts by as much as 50 percent. Daily rates were highest in Alaska at $550 a day, followed by New York City at $366 a day. Newark, N.J., Bridgeport, Conn., Boston and San Francisco followed closely behind. The middle section of the country registered at the lower end of the scale, with daily rates in states such as Oklahoma, Arkansas, North Dakota and Kansas under $120 a day.

Assisted-living costs also saw increases, with a 5 percent increase over last year for one-bedroom accommodations. Hawaii has the highest rate at $49,200 a year, while Arkansas has the lowest at $18,100.

More demand, higher costs
“Americans enjoy a greater life expectancy than ever before, and more than 70 million people are approaching retirement,” says Buck Stinson, president of Genworth Financial’s long-term care business. “These two factors will drive demand for long-term care and continue to put upward pressure on costs for nursing homes, assisted living and home care.”

According to LIMRA, only 6 million Americans have individual or group long-term care insurance (LTCI). That means the vast majority of retirement-aged Americans are without protection. Chances are you have a lot of conversations to start among your clientele. With long-term-care costs continuing up a steady incline, it appears that the talk with your clients will be about the necessity—not luxury—of having LTCI.